11. Which of the following is not a characteristic of a corporation? a.Cash divi
ID: 2538001 • Letter: 1
Question
11.
Which of the following is not a characteristic of a corporation?
a.Cash dividends paid by a corporation are deductible as expenses by the corporation.
b.A corporation can own property in its name.
c.Corporations are required to file federal income tax returns.
d.The financial loss that a stockholder may suffer from owning stock in a public company is limited.
12.
The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
a.increase total expenses and total liabilities
b.decrease total assets and stockholders' equity
c.increase total assets and stockholders' equity
d.decrease total liabilities and stockholders' equity
Explanation / Answer
11.) The correct answer is option (a) i.e. Cash dividends paid by a corporation are deductible as expenses by the corporation since dividend paid by corporation is not a deductible expense.
12.) The correct answer is Option (b) i.e.decrease total assets and stockholders' equity since cash paid for dividend will reduce total assets and dividend paid will reduce stockholders' equity.
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